HomeBusinessVirtual real estate

Virtual real estate

As the world moves closer and closer to virtual realities and artificial intelligence, no area of our lives will be unchanged. Real estate is and has always been a people-to-people business and based on Zillow’s recent experiment with automating the process, the people are winning.

Zillow created a decade-long successful business when they established an algorithm to put a value on practically any property in the country. Zillow’s Zestimates were so popular it spun off the term “Zillow Surfing” because who doesn’t want to know what their house or their relative’s house or their best friend’s house is worth? Use of their app grew 19% this year alone. With all that experience and success, what could go wrong by going into the house flipping business?

House flipping is nothing new to the real estate business. An investor buys a home, does a quick touch up and puts it back on the market at a tidy little profit. Sounds perfect for a company that already knows the value of everything; therefore, Zillow went into the iBuying business.

Based on their Zestimate, Zillow makes offers to sellers who were looking to make the process faster by eliminating the long inspection, appraisal and closing process. Typically, they were looking for properties that were relatively new, about the same size and affordable, basically homes that they could turn around quickly without doing much work.

Unfortunately for Zillow, they started their iBuying program at just the wrong time. Because of the pandemic, home prices rose sharply and properties that did need renovations sat on the market because of the dearth of contractors. Despite the buying frenzy the country was in, Zillow said it was able to convert only about 10% of serious sellers who asked for a Zillow offer –  apparently there was too much competition from non-virtual buyers.

They ended up announcing the shutdown of the iBuying division of their business in early November. It will take them a few more quarters to wrap it up at the expense of several thousand employees. Their flipping program was a big flop. This all goes back to real estate being a people-to-people business, particularly when the product you’re buying and selling is generally the most expensive thing in people’s lives.

So, is there a future for iBuying? Probably; there are still companies out there doing it. My opinion is the machines will never be good enough on their own to compensate for real people. It’s certainly possible that the future lies in a combination of virtual and real people involved. The process still needs a real estate expert to lay eyes on the property and the location looking for unusual and negative aspects that no algorithm can compensate for.

Meanwhile, there are a whole bunch of startups who will purchase a home for a buyer with all cash and wait for their mortgage to be approved for a fee. This, of course, is in response to buyers being locked out of the market by all-cash buyers. The National Association of Realtors reported that homes sold in July received an average of 4.5 offers, with all-cash buyers with no contingencies always rising to the top of the pack. A few of these companies are Flyhomes, Ribbon Homelight Inc. and Orchard.

Selling a home is not like selling shoes online. They’re hard to return if the fit isn’t right and companies who have experience in this area of marketing are finding that out. Replacing the knowledge of a hands-on real estate professional isn’t easy, no matter how good you are at writing algorithms.

Most Popular

More from Author

Buyers losing hope

Tired of waiting for mortgage rates to come down? You’re not...

Boomers continue to boom

Just when you think they’re too old to influence the smart,...

Florida insurance ground zero

We are on the brink of hurricane season and this year...

Cost of American dream rising

Owning a home of your own has been the American dream...

Fritz Dahlquist lived a wonderful life

HOLMES BEACH – Longtime Holmes Beach resident and Nautilus condominium complex manager Fritz Dahlquist passed away after a brief and sudden illness on May 8. He was 70. He’s survived by his wife of nearly 45 years, Dena, and their two adult daughters, Abby Dahlquist and Lenna Dahlquist....

Signed palm tree agreement remains elusive

BRADENTON BEACH – A newly-planted coconut palm tree that fell over on Bridge Street last week has raised questions about whether the city obtained a signed indemnification agreement prior to planting it and 79 other trees. At the April 3 Community Redevelopment Agency (CRA) meeting, members unanimously approved...

First win for Shady Lady

ANNA MARIA – After two halves of youth soccer action, team AMI Coconuts could not put a point on the scoreboard against The Intuitive Foundation squad in the 8- to 10-year-old recreational soccer league at The Center of Anna Maria Island. The Coconuts team put up a strong...

Buyers losing hope

Tired of waiting for mortgage rates to come down? You’re not alone. Every potential buyer out there is waiting for the same thing, the problem is the Federal Reserve isn’t moving the needle, so it might be a long wait. The Federal Reserve made no move in their...

Try a beach fishing adventure

Are you an accidental angler? Someone who might not be passionate about fishing but who has always wondered what all the hype is about? Maybe you’re an avid freshwater angler from the north unfamiliar with the salt. Whatever your situation, if you want to get a taste...

Latest Pine Avenue bid rejected

ANNA MARIA – Following Mayor Dan Murphy’s recom­mendation, the city commission rejected the latest Reimagining Pine Avenue bid received from C-Squared. On May 9, the commission voted 5-0 in favor of rejecting C-Squared’s approximately $1.4 million bid to construct a one-block Reimagining Pine Avenue prototype area that was...

Candidate qualifying commences soon

ANNA MARIA ISLAND – The candi­date qualifying periods will soon begin for those seeking election or reelection during the 2024 election cycle. Anna Maria provides a two-week qualifying period. Bradenton Beach, Holmes Beach and Manatee County provide one-week qualifying periods. All city commission and may­oral terms on the...

Farrington secures petition signatures

MANATEE COUNTY – Mana­tee County Supervisor of Elec­tions candidate Scott Farrington has secured enough petition signatures to avoid paying a $10,133 qualifying fee. The one-week qualifying period for county candidates begins on Monday, June 10 at noon and ends on Friday, June 14 at noon. Farrington will face...

Captain: Derelict boats looming issue

CORTEZ - Tour boat Capt. Kathe Fannon is questioning why authorities are focusing on the removal of Raymond “Junior” Guthrie’s net camp from the waters off Cortez while ignoring more than 20 derelict boats in the same waters. “The net camp is who we are, it’s our heritage,”...

Season’s first shorebird nest discovered

BRADENTON BEACH – The first shorebird nests this year on Anna Maria Island have been spotted and marked by Anna Maria Island Turtle Watch and Shorebird Monitoring volunteers. A colony of least terns began nesting the week of May 6 at an undisclosed location in Bradenton Beach. A...

Mayors discuss law enforcement consolidation

ANNA MARIA – Anna Maria Mayor Dan Murphy and Holmes Beach Mayor Judy Titsworth are not on the same page when it comes to the potential consolidation of law enforcement services, with each mayor preferring their city’s law enforcement agency take over policing in both cities. As is...

March tourism numbers soar

ANNA MARIA ISLAND – March tourism numbers are up from last year in all three Island cities, significantly so in the City of Anna Maria. Each month, the Manatee County Tax Collector’s Office reports how much income the county’s 5% tourist tax produces. The tax is collected from...